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+--- Thread: Income Tax on Advance Payment (/thread-income-tax-on-advance-payment)
Income Tax on Advance Payment - zeeshan_660 - 07-24-2009
Salam to All
Please tell me about income tax deduction on advance payment.
For Example a firm supply to us and we pay some advance payment
i.e Rs. 1,600,000/-at this time and remaining pament after supply.
so please tell me we deduct the tax on whole supply at this time or just deduct on advace payment.
regards,
Muhammad Zeeshan
- awaisaftab - 07-25-2009
According to section 153 of Income Tax Ordinance,a person who makes advance payment for goods and services is also liable to deduct withtholding tax as per rates mentioned in Division III part III of schedule I of the ordinance. The section 153 lays down
"Every prescribed person making
a payment in full or part including a payment by way of advance to a resident
person or permanent establishment in Pakistan of a non-resident person -
(a) for the sale of goods;
(b) for the rendering of 1[or providing of] 2[ ] services;
(c) on the execution of a contract, other than a contract for the
3[sale] of goods or the rendering of 4[or providing of] 5[ ]
services,
shall, at the time of making the payment, deduct tax from the gross amount
payable at the rate specified in Division III of Part III of the First Schedule."
You are required to deduct a tax @3.5% on 1,600,000/- and deduct tax on remaining amount at the time of making payment for this remining amount.
Regards,
Awais Aftab